Outsourcing – purchasing services from an external supplier rather than performing the work internally – is a popular but politically sensitive means of cutting costs. There has been an increasing use of third parties for HR functions, such as managing payroll and other employee data, and for traditional Finance functions, such as invoice services. The manufacture of goods has even become part of this trend; though the design function is typically kept in-house. Third
party call centre operatives can offer customer service expertise that may be more expensive to provide in-house. “Offshoring”, when functions are moved abroad, often to India or China, where the average wage is considerably lower raises job protection issues. The potential profits from outsourcing operations encourage underdeveloped countries to invest in the necessary educational infrastructure and skills training that are required to support such business. Still, higher corporate profits may be seen to be at the expense of low-wage economies, and the cost
benefits are not always passed on to the consumer. Additionally the consumer may not benefit from an improved quality of customer service. Outsourcing decreases prices in another way – the competitive marketplace in which service providers companies operate gets squeezed.
